The big squeeze

For a complete list of California banks and institutions that do and don’t levy a surcharge on welfare recipients, go to

Some banks and credit unions levy surcharges and fees on low-income people who receive federal cash aid on state-issued plastic debit cards. In fact, the Electronic Benefit Transfer surcharge paid by welfare recipients totaled a whopping $2 million a month statewide last September, said Kevin Aslanian with the Coalition of California Welfare Right Organization in Sacramento.

The surcharges range from $1.50 to $3 for each transaction.

For example, Bank of America charges CalWORKs recipients in California $3 per transaction for accessing their funds at an ATM. Mechanics Bank, on the other hand, does not charge EBT recipients a user surcharge for an ATM transaction. Likewise, numerous credit unions are surcharge-free for EBT cardholders, including the Sacramento Credit Union, USE Credit Union and Yolo Federal Credit Union.

To be eligible for CalWORKs, recipients must be at 50 percent of the official poverty level ($18,530 a year for a household of three persons), according to the federal Department of Health and Human Services. Some California households that receive CalWORKs via EBT cards also receive food aid on them through the CalFresh program (formerly federal food stamps)—aid from the federal Supplemental Nutrition Assistance Program that is not subject to bank surcharges.

In the bigger picture, the surcharge issue points to the failure of government aid for poor people to keep pace with inflation.

For instance in 1985, a three-member household received $587 in federal assistance via Aid to Families with Dependent Children, the predecessor to CalWORKs. Today, the maximum CalWORKs aid for that same household is $638. Adjusting for inflation though, $587 in 1985 has the same buying power as $1,234 in 2011, according to the federal Bureau of Labor Statistics.

Thus, the current dollar amount of CalWORKs aid per month goes less than half as far as it did a quarter-century ago for basic commodities such as bread, gas and milk, said Aslanian. Jessica Bartholow, a legislative advocate with the Western Center on Law and Poverty in Sacramento, agrees.

“When a mother tells you that paying a surcharge to use her EBT card hurts her family, that’s real,” she said.

A little more than a decade ago, the state of California began the process of shifting cash and food aid recipients to EBT cards so as to save costs on printing and processing checks and food stamps, according to Bartholow. Also, EBT cars are more secure and less prone to fraud and theft.

But the change opened the gate for bank surcharges.

Today in California, ACS State & Local Solutions Inc. is a Xerox company that handles the electronic transfer of federal aid in cash and food to CalWORKs and holds the state contract until 2014. Under existing law, ACS can charge CalWORKs recipients a fee of 85 cents for an EBT cash activity beginning with the fourth transaction during a one-month period.

Asked to state the dollar amount per transaction fee that ACS charges banks that levy EBT surcharges on CalWORKs recipients, the California Bankers Association declined to reply. At the state Capitol, the CBA, California Credit Union League and California Independent Bankers successfully opposed Assembly Bill 756—a measure by Assemblywoman Holly Mitchell (D-L.A.) that would have waived EBT bank surcharges for CalWORKs recipients.

Given the quick defeat of this bill in a health- and human-services subcommittee, advocates for those who receive cash aid on EBT cards have decided to take a different approach.

“We knew that if we introduced such a bill in the state Legislature that the banks would kill it again,” said Bartholow of the Western Center on Law and Poverty.

Thus, a state Department of Social Services working group has began meeting to address the EBT bank surcharge issue. “It’s good that the state DSS is helping to try and solve this problem,” she said.

10 who charge the poor

Bank of America

7-Eleven (Cardtronics/Citi)

Bank of the Sierra

California Community Bank


CVS (Cardtronics/Chase)

El Dorado Savings Bank

Golden 1 Credit Union

Target (Cardtronics/Chase)

Tri Counties Bank

10 who don’t charge the poor


First Northern Bank

Mechanics Bank

River City Bank

Sacramento Credit Union

Safeway ATM

Umpqua Bank

U.S. Bank (including Walgreens)

USE Credit Union

Yolo Federal Credit Union